Is this the most serious misunderstanding plaguing customer-centricity?

Misunderstanding, reality and narrative

There are so many misunderstandings around customer-centricity that it is hard for me to know where to start. In this post, I want to deal with a particularly dangerous and widespread misunderstanding. Some of you have led yourself to that misunderstanding after reading my last post on customer-centricity. Before I deal with this misunderstanding I want to draw your attention to the following:

Reality is amenable to and readily supports any narrative that we place on it. Once upon a time the narrative was the earth is flat. Later the narrative changed to the world is round. Once upon a time there were witches in the world, now, at least in the West, there are no witches. For a little while the narrative was almost all of the DNA in the human genome was junk DNA. Today the narrative is that vast majority of so called ‘junk DNA’ is essential to and involved in key biochemical processes. I hope you get what I am getting at.

No single definition and/or ‘understanding’ of customer-centricity will exhaust customer-centricity. Put differently, customer-centricity seems so obvious until you really grapple with it. And when you grapple with it all kinds of stuff shows up – some of it rather surprising. Furthermore, what shows up as customer-centric in one context may not show up as customer-centric another context.

With that out of the way and the context set, lets grapple with this misunderstanding.

To be customer-centric you have to be nice and give you customers what they are asking for

Far too many people confuse customer-centricity with doing what the customer wants, giving the customer what he wants, and being ‘nice’. Some go further and equate customer-centricity with being a patsy, a pushover. I say this is the most serious misunderstanding plaguing customer-centricity.

Why is it so dangerous? First, there are the people who understand customer-centricity this way and for them it shows up as unrealistic and distasteful. Given this way of understanding customer-centricity they dismiss it and/or want nothing to do with it. Second, there are a different group of people who speak and act as if customer-centricity is as simple as giving the customer whatever he asks for.

Customer-Centricity is neither this simple nor this simplistic

To both of these groups of people I say that you are mistaken. You’re mistaken, badly mistaken. Customer-centricity is neither that simple nor that simplistic.

I say that being customer-centric is a stand that you take and not a fixed set of behaviours. What kind of stand am I talking about? The kind of stand that says that the only acceptable profit is that made by creating genuine value for customers. It means letting go of existing policies and practices that enrich the company at the expense of customers – ‘bad profits’. Taking the customer-centric stand is not possible without courage. The kind of courage Tony Hsieh and the Zappos management team showed when the business was in deep trouble financially and they gave up a lucrative source of revenue, profits and cash because it did not fit with their vision and stand to be the brand renowned for great customer service.

I say that being customer-centric is as much about being proactive in coming up with new products/services/experiences that you believe will create value for customers as it is about reacting to what customers say/ask for. As I write this Apple/Steve Jobs/iPod/iTunes/iPhone/iPad come to mind immediately. Or think of Amazon, ebooks and the Kindle.

I say that being customer-centric is as much about influencing/persuading customers as it is listening to/obeying customers. Yes, there is a role for the right advertising, marketing and selling. Customers are human beings and they do not necessarily know what is best for them. Even if they do know, customers often do not do what is best for their well-being. This is where you can use insights into the human functioning to come up with a design that nudges the customer towards the right behaviour. It is also where something more forceful than a nudge can be necessary. Again I cannot help but think about how Jobs handled the antenna/signal reception issue around the iPhone. Or think about how Zappos persuaded shoe buyers that it was OK to buy shoes online without trying them on.

I say that customer-centricity only makes sense in a particular context and as such being customer-centric requires a “yes” when it is appropriate to say “yes” and a “no” when it is appropriate to say “no”. This point was the key point made by Frances Frei and Anne Morriss in their book Uncommon Service. As they say “you have to be bad in the service of good”. They talk at some length about Commerce Bank: to be great at convenience and service Commerce Bank chose to only offer one banking product (checking account) and paid the worst rates of any bank in the market place. Look, if you turn up at my Mercedes dealership and want to pay Ford prices then the most ‘customer-centric’ behaviour is for me to drive you to the nearest Ford dealership! Furthermore, sometimes a “no” is simply in the best interests of your customer even if he does not know it. This was the point I was making in this earlier post.

I say a lot. What do you say? If you the situation at hand differently to me then speak up and share your understanding.

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Author: Maz Iqbal

Experienced management consultant working at the intersection of strategy, customer, and technology. Combine a tendency to think strategically with a penchant for getting my hands dirty at the coalface of implementation.
View all posts by Maz Iqbal

11 thoughts on “Is this the most serious misunderstanding plaguing customer-centricity?”

Hi Maz, Great Stuff! I was lucky enough to meet Professor Minzberg, he cut to the chase:

“…an organisation choses to be in a particular business – to be successful it has to understand what different kind of customers it has, how they differ, what they want, how they need it provided and what they are willing to pay for it.

Strategy is merely a fancy word for identifying, obtaining and retaining customers and the successful organisation will do this better than the competition at an acceptable margin”.

That is the only reason for being customer-centric, but those that do consistently deliver better than their industry returns to shareholders.

What value does it add to say “Strategy is merely a fancy word for winning wars and the successful military will do this better than the competition.” I say none, it is stating the obvious. Yet, that does it mean that what is stated is easy, that it is no challenge. The challenge with strategy is that it is not immediately obvious how one ‘defeats the enemy’. It requires thought, it requires intelligence, it requires insight, it requires an insight into one’s own resources….

I say to pursue customer-centricity for the sake of higher profits, is to be ‘not customer-centric’. Said straight, that this the best definition of being ‘profit centric’ To create outstanding value for customers, to simplify/enrich/contribute to the well being of our customers, and to be adequately rewarded for creating this value counts as being customer-centric.

To get to grips one has to get to grips with the distinction ‘for the sake of which’. My parents did all kinds of stuff for me and to me. And some said they were centred on me. I knew better. What was the ‘for the sake of which’ my parents did what they did for me/to me? For their prestige, for their honour, for their material well being.

Hi Maz, I understand your position but hold a different one. Where I differ is that there would be no need to have discussions about an organisation needing to be customer-centric if the organisation didnt’ exist. The organisation EXISTS to make money from delivering value to clients. The Harvard, Stanford and London Business Schools’ research, all found the same thing, as did Michael Hammer, James Champy and The CSA. The most successful companies are those that worked out what the customer wanted, what they were prepared to pay for it: then designed its creation and delivery at the required customer price.

To continue to stay in business and deliver consistently better than their average returns to shareholders, the price HAS to include an acceptable margin to reward shareholders. As a business its very easy to go broke being customer centric if one doesn’t think how to get an acceptable margin from the price a customer is prepared to pay.

The basics are:

1 A collection of people set up an organisation and chose to make their money from selling a specific set of products / services to a range of customers

2 Work out what return they want from their investment

3 Determine the best strategy (e.g. Customer-centricity)

4 Apply it

5 Invest in another Company of the same sort if shareholder returns are unacceptable

Being concerned about profit doesn’t make a company “profit-centric” in the same way that just spouting platitudes and having a a customer complaint department doesn’t make an organisation customer-centric.

As for Minzbergs remarks, unlike you, I thought they were profound. In the last 20 years working with FTSE 100 and F 500 companies I have seen less that 5 Strategies that measure up to this definition.

As for how one brings about Customer-centricity, thats why our clients use us.

Im afraid your view, to me, sounds more like a purist religion than practical business sense.

It occurs to me that your charge towards me could be correct. You certainly have strong grounds for your assertion. The majority is with you. And if it makes a difference then I say that I did not intend to offend you. For any offence caused, I apologise.

You and I differ, certainly. We differ as to the starting point: what the purpose of an organisation is. You are in accord with the traditional view embedded in law. The company exists to maximise profits for its shareholders. I am more in agreement with the view that an auto company should make great cars, that an insurance company should pay out valid claims, a PC company should make greAt computers. Put differently, I agree with Steve Jobs: the purpose is greatness not profits. Profits are the reward for creating value for customers in a competitive market.

I am with the USAA school of customer centricity. I strive to know my customers as fellow human beings, to treat them as fellow human brings. And I think/act in terms of contribution and creating value. Naively, I act as if the profits will flow if I do the right things. Put differently, I focus on the batting, the fielding, the bowling in the game of cricket rather than the scoreboard. And I am in the minority: that is ok by me.

All the best Bob, let’s agree to disagree and treat each other with respect: fellow travellers on the path called Life. That is about S religious as you can get, right?

Great post, customer centricity has nothing to do with giving the customer everything they want but unfortunately the term can be interpreted that way!

I Love the example of driving the “Ford” customer to the Ford dealership!

Steve Job’s approach was one of the most customer centric leaders our world has seen, most people would not describe him as “Nice”. He knew what customers wanted and understood it was Apple’s job to couple that customer knowledge with a knowledge of what was possible technology wise.

Apple have blown the doors off their competitors because they knew customers wanted simple, elegantly design products that just work and they have been able to deliver that and everything that surrounds it. They don’t apologize for pricing at a premium level and nor should they…..

A great challenge. I say that you have setout the three fundamental requirements of being in business. Find what customers want e.g. low cost air travel. Get some – put in place the business model and associated infrastructure. Give it to them – allow them to fly to low cost destinations. By that argument Ryanair is customer-centric. Is it? I say it is value proposition/business model centric. I say that as and when an airline comes along that provides low cost air travel with humanity then it will be interesting to see how many customers choose to travel with Ryanair.

Whoever wrote those 3 things probably didn’t stay in business long. Unless one does it better than the competition it’s not possible to maximise long-term sales at an acceptable margin for shareholders.

If one doesn’t understand and plan for how the customer types differ and how they want / need to be handled (from hearing about ones products to providing service support) they won’t be coming back any time soon. This isn’t altruism but a clear understanding that everything we do from advertising our products / services to providing payment options has a value for customers and they constantly measure us against our competitors and what we have promised.

Hi Maz,
I’ve thinking about the word centricity a lot recently and am becoming increasingly frustrated with it. A different word/term that I think better describes what I would like to see (and I think you do too) is customer advocacy (check out the definition at http://en.wikipedia.org/wiki/Customer_advocacy). Here’s the first para:
Customer advocacy is a specialized form of customer service in which companies focus on what is best for the customer. It is a change in a company’s culture that is supported by customer-focused customer service and marketing techniques.

Questions of will cannot be addressed through solutions made of words nor of solutions consisting of techniques.

In the course of being human we know what generates loyalty. If I treat you well, if i go out and battle for you, if I put myself at risk for you then the foundation for loyalty to show up has been created. I have created that foundation through my actions. And if you have a conscience then the rule of reciprocity will kick in: you will wish to reciprocate and you will reciprocate. Noticing that you are honourable I will be motivated to reciprocate in return. Put simply: loyalty begets loyalty.

Yet, in the world of business we miss this. Companies do not fret about how can we treat our customers well, how can we be loyal to our customers? The opposite is the case: the people concerned are obsessed with this question: how can we get more money out of our loyal customers? Just think about annual renewals: the customers who pay the most are the ones that do not shop around, those that simply accept the renewal amount.

The same applies to customer-centricity. We know what it is. Each of us is a customer and we know what constitutes customer-centricity. We know! We feel it! It is just that we ‘bastardise’ every genuine concept with the existing way of viewing/being-in-the-world: fleece customers to please shareholders.

To conclude: wordsmithing will not make any difference. Issues of the heart cannot be addressed through the mind. The heart gives, looks for, generates connection. The mind is calculating and selfish: always thinking of itself.